In his 30 years of broadcasting and publishing fiction, Garrison Keillor has set the laugh bar pretty high. Lots of people can remember exactly where they were and what they were doing while listening to the Prairie Home Companion monologue in which, say, the Homecoming Queen riding on the fender of the tank comes face to face with the farmer hauling his filled-up septic tank (an old car) to the town dump, or the one where the guy next door keeps using his new TV remote to turn on his neighbour's TV.

Keillor doesn't always meet his own standards, and has sometimes seemed (imagine!) to resent our demands. There's another Garrison Keillor trying to get out - a man with a more thoughtful take on things, who would like us not to be always waiting for the laugh. But too bad. We are.

It was the more thoughtful Keillor who was on display in his last Lake Wobegon novel, Pontoon, a meditation on death that was considerably less grumpy than, say, Keillor's first novel (and one of my favourites), WLT: A Radio Romance. The grumpy Garrison is back in Liberty, and I say, "Hallelujah!"

Liberty opens with the greatest Fourth of July Celebration in Lake Wobegon history, a huge parade orchestrated by auto mechanic and car dealer Clint Bunsen that happens to be picked up by CNN and shown worldwide. Within days, though, the Lake Wobegoners are complaining that things aren't what they used to be, and whatever happened to the sort of Fourth they remember from the old days, where one old guy would mumble and stumble through a reading of the Declaration of Independence, and there was always a cow-pie-throwing contest?

In short order, Clint is deposed from his position as dictator of the Fourth of July, and precipitated into a mid (or late) life crisis. Clint is 60, just the age his father was when he died. He's always lived in Lake Wobegon, fixing cars, and his future is shutting down in front of him, rendering his life both short and meaningless.

In particular, he can't stop thinking of that turning point, the fatal mistake he'd made at 23: "And he was in California at the time so he could have just stayed (Duh) but he drove a thousand miles back to Minnesota to say good-bye to Mom and Dad and in no time they made him feel guilty and wretched for wanting to abandon them so he stayed in the frozen North and married his high school sweetheart who he'd tried to leave behind." His solution to his melancholy is 28-year-old Angelica, a psychic he meets online who is herself planning to move to California from her present home and base of spiritual operations in St Cloud.

Keillor's principal stylistic charm as a writer is his way with the run-on sentence. Not for him the crisp, open-and-shut observations of fellow midwesterner Ernest Hemingway. His inspiration seems to be the oral style of small-town bores, who buttonhole someone and just keep adding clause after clause, example after example, thought after thought, in order to sustain the attention, or at least the presence, of the buttonholee. Clint, for example, must deal with Art, the local fishbait purveyor and survivalist who plasters his deteriorating motel with signs such as "No meter readers on the premises. This means you. Trespasses by gas or electric employees will result in drastic action. No ifs, ands, or buts. Don't say you weren't warned. That is an outright lie!" Then there is Berge, the town drunk, who yaks on and on, his "red pocky face six inches away breathing whiskey and coffee on him". Clint doesn't say much, but his thoughts run on, and in them the whole history of the town replays itself, chaotically alternating with the competing voices of his fellow citizens (and the ever-expected governor of Minnesota, who is supposed to ride in the parade).

In Liberty, Keillor makes a good case for America as a nation of self-important fools, old friends and fellow citizens who really cannot stand each other any longer. The parade is a long line of busybodies and self-promoters - the ocarina band from Our Lady of Perpetual Responsibility, the Sons of Knute in their Viking costumes, the ladies' whistling drill team. Only the Percherons have any sense, and that is possibly because they prefer not to reveal their thoughts.

It is the dark view, of course, that makes a writer funny, and as a man of his time, Keillor never hesitates to bring up sex or defecation, thereby expanding his comic possibilities. Keillor's small-town America is a grimy, tattered, junky place where the folks are getting older and more set in their ways. But they grow their own tomatoes.

In order to test whether Keillor's vision is a positive one or a negative one, I read his novel and then lay awake in the dark, thinking about the fate of the US. He makes a good case against the Wobegoners - their self-importance has only grown since they decided that all their children were above average, and they seem increasingly desperate. But I drifted off rather happily, reassured by their energy and their colour and their embrace of the unexpected. Keillor seems to think that things might work out, after all. It could be worse.

• Jane Smiley's most recent novel, Ten Days in the Hills, is published by Faber. To order Liberty for £15.99 with free UK p&p call Guardian book service on 0870 836 0975 or go to guardian.co.uk/bookshop